Finance Act 2004

44 Insurance companies: transitional provisions U.K.

(1) Step 7 has effect for the first new accounting period as if, in paragraph (b) of that Step, the reference to amounts carried forward under subsection (12) or (13) of the new section 76 (carry forward of unrelieved excess to later accounting period) included—

(a) a reference to amounts falling to be carried forward from the last old accounting period under section 75(3) by virtue of the old section 76(1) (including any amounts falling to be so carried forward by virtue of the old section 76(5)), and

(b) a reference to so much of any pool under subsection (6) of section 87 of the Finance Act 1989 (c. 26) (pre-1990 expenses) as remains after making any reduction required by paragraph (c) of that subsection for the last old accounting period.

(2) To the extent that an amount—

(a) was not deductible under the old section 76(1) by a company for any old accounting period, but

(b) would have fallen to be taken into account by the company in determining the expenses deduction to be made under the new section 76(1) for an old accounting period if the amendments made by section 40 and Schedule 6 had been in force in relation to that period,

the company’s basic deduction (see Step 8) for the first new accounting period shall be increased by the addition of that amount.

(3) Where there is an accounting period that begins before, and ends on or after, 1st April 2004 (“the commencement date”), it shall be assumed, for the purpose of determining the deduction to be made under section 76(1), that that accounting period (“the straddling period”) consists of two separate accounting periods—

(a) the first beginning with the straddling period and ending with the day preceding the commencement date (“the first notional period”), and

(b) the second beginning with the commencement date and ending with the straddling period (“the second notional period”),

and the deduction shall be determined in accordance with subsections (4) to (6).

(4) For the purpose of determining the deduction to be made under section 76(1) for the straddling period—

(a) first add together—

(i) such amounts falling within the old section 76(1) as were disbursed for the first notional period, but without deducting amounts falling within the old section 76(1)(aa), (a), (c), or (ca),

(ii) the amounts falling to be brought into account at Step 1, as reduced at Step 2, for the second notional period, and

(iii) amounts falling to be carried forward from the previous accounting period under the old section 75(3) by virtue of the old section 76(1) (including any amounts falling to be so carried forward by virtue of the old section 76(5)),

(b) then reduce the aggregate of those amounts (but not below nil), by deducting from that aggregate any amounts falling within the old section 76(1)(aa), (a), (c), or (ca) for the straddling period,

and that aggregate, as so reduced, is deductible in accordance with the old section 76(1)(e) but subject to the old section 76(2) to (2D).

(5) Subsection (3) does not have effect for the purpose of determining the amounts that are deductible for the straddling period under section 76(1) by virtue of any provision of the Corporation Tax Acts apart from—

(a) the old section 75(3),

(b) section 76, and

(c) this section,

(so that, in particular, the old section 86 has effect for the straddling period).

(6) No amount shall be brought into account in determining the deduction to be made under section 76(1) for the straddling period except as provided by subsections (4) and (5).

(7) Any reference in this section to a numbered Step is a reference to the Step so numbered in subsection (7) of the new section 76.

(8) In this section—

• “the commencement date” shall be construed in accordance with subsection (3);

• “new accounting period” means an accounting period beginning on or after the commencement date;

• “old accounting period” means an accounting period beginning before the commencement date;

• “the new section 76” means section 76 as it has effect in relation to a new accounting period;

• “the old section 76” means section 76 as it has effect (apart from subsection (3) above) in relation to an old accounting period;

• “section 75” means section 75 of the Taxes Act 1988;

• “section 76” means section 76 of the Taxes Act 1988;

• “the old section 86” means section 86 of the Finance Act 1989 (c. 26) as it has effect (apart from subsection (3) above) in relation to an old accounting period.